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A Guide To Sectional Title in South Africa
A Guide To Sectional Title in South Africa
secti o n a l title i n
south africa
This guide was produced by the Centre for Urbanism and Built
Environment Studies (CUBES), based at the University of the
Witwatersrand, and the Socio-Economic Rights Institute of South
Africa (SERI). The following people contributed to the research and
writing of the guide: Claire Benit-Gbaffou, Michael Clark, Margot
Rubin, Kate Tissington, Lesego Tshuwa, Elisabet van Wymeersch,
Stuart Wilson, Maurice Smithers, Yogan Naidoo and Heather
Gerhard.
Introduction i
Section 1
Sectional title schemes: roles and responsibilities
Section 2
Dealing with disputes and challenges arising from sectional title
schemes
Organisations 25
Online resources 26
Introduction
This guide is structured in two sections. The first section deals with
a number of key questions that are commonly raised by people
involved in sectional title schemes. The answers provided are meant
to assist sectional title owners, trustees and body corporates to better
understand the legal rules that apply to sectional title schemes.
The second section lays out how certain disputes and challenges that
come up in sectional title schemes should be dealt with.
i
Section 1
Sectional title schemes:
roles and responsibilities
1
1.3 What is the common property?
All the parts of the sectional title scheme that are not part of sections
are referred to as the common property. The common property
includes spaces which everyone may use, like the gardens, the
driveways, roads, corridors, staircases, lifts, recreational facilities, the
entrance area and the outside of the building. Sectional title owners
own their section as well as an undivided share (or percentage) of
the common property. The body corporate controls the common
property.
There are also areas on the property that may only be used by a
specific owner or owners, for example, a private garden area or a
parking bay. These are called exclusive use areas because these parts of
the building are only for use by specific owners. Exclusive use areas
are subject to the rules and regulations of the sectional title scheme.
3
5. The body corporate must elect the trustees for
the following year. Some or all of the trustees from
the previous year could be re-elected, or completely
new trustees could be elected.
6. If any member of the body corporate has earlier
informed the body corporate that there is some
special business to discuss, that can also be done.
7. The body corporate can give directions and set
restrictions (limitations) on the powers of the trustees.
8. The body corporate has to decide on the legal
address of the body corporate (the domicilium
citandi et executandi). This is the address
where the legal notices of the body corporate will
be delivered. If a managing agent is appointed, the
legal address would usually be his or her address (to
make it easier to manage the scheme).
There are other forms of voting that are used when deciding whether
to change the management rules or conduct rules. You can read more
about this later on in this guide.
4
1.9 What is a special general meeting?
The owners or trustees can also call a special general meeting when
specific issues come up that need to be dealt with by the whole
body corporate. If an owner wishes to call a special general meeting,
they must receive the support of at least 25% of the owners (by
participation quota). See 1.19 below for more on participation
quotas.
5
1.12 What are the responsibilities of the trustees?
The trustees have a fiduciary duty towards the body corporate. This
means that they are legally responsible for taking care of the property
and money, on behalf of the rest of the owners in the body corporate.
This would include the control, management and administration
of the common property, making sure that owners’ sections comply
with the rules of the sectional title scheme, and making sure that
levies are paid. The trustees may also appoint a managing agent to
assist them with the daily running of the building or complex. The
Sectional Titles Act says that the trustees must meet at least once
every three months.
The trustees may appoint a managing agent to deal with the daily
running of the building. A managing agent may not make any
decisions concerning the body corporate or the building without the
approval of the trustees.
When choosing a managing agent the trustees should make sure that
the agent is a registered estate agent. Proof can be obtained by asking
the candidates for a copy of their Fidelity Fund Certificate, which is
issued by the Estate Agency Affairs Board (EAAB). This would mean
that the body corporate would be covered by the EAAB’s Fidelity
Fund, which would protect the body corporate from losses arising
from theft by the managing agent.
7
The levy may also include a certain amount for expected future
expenses. This would be the case where the body corporate may
have a big expense in the future that would be too expensive for the
owners to pay for when the expense arises e.g. the replacement of a
lift.
Levies are usually set for a year, but may be changed in exceptional
cases.
t The rates and taxes owed to the municipality by the scheme (if
the sections are not separately billed);
t the water, electricity and repair costs for any electrical
installations (for the common property) e.g. a shared boiler;
t insurance for the building or buildings;
t the managing agent fees (if a managing agent is appointed);
t the yearly audit fees;
t security and maintenance costs; and
t any other costs that the body corporate may be responsible for, as
determined by the trustees every now and then.
In cases where the body corporate does not have enough money or
the body corporate is in debt, the trustees can declare that a special
levy must be paid. This is another levy that may be a once off levy or
for a set period.
8
1.19 How are levies calculated?
9
The participation quota determines:
2.
3. The voting power of the owner in AGMs or other
general meetings.
There are two kinds of costs that owners need to be aware of:
1. Communal or common property costs for shared areas: If no
special rules have been made as to how communal costs should
be shared among owners, then the costs must be split among the
owners according to their participation quotas.
2. Exclusive use costs: These are the costs that apply to the units
and exclusive use areas of the different owners. There are two
ways in which the municipal services could be structured:
10
1.21 What kind of rules apply in a sectional title scheme?
There are two sets of rules that apply in a sectional title scheme. The
first are management rules that apply to the trustees, and the second
set of rules are conduct rules that apply to all the owners or tenants
living in the building.
11
the body corporate could decide to change these rules at a general
meeting if they pass a special resolution (this means that at least
75% of the members must agree to the change – this is in terms of
numbers and participation quota).
Some examples of issues that are determined in the conduct rules are:
t Insurance payments
t Vehicles
t Laundry
t Noise
t Use of communal areas or activities on the common
property
t Security
t Supervision of children and pets
t Tenants or visitors.
12
Section 2
Dealing with disputes and challenges
arising from sectional title schemes
??
? ?
??
The Sectional Titles Act does not provide for debt relief or debt
restructuring. As a result, if an owner is struggling to pay their levies
it is important for them to speak to the trustees about this issue.
Often the owner and trustees can informally work out a payment
plan.
However, if an owner would not be able to pay the levies for a long
period of time, the owner should consider selling or renting out the
unit so that they do not fall into more debt.
2.2 What can the body corporate do about owners who are
not paying their levies?
An owner who has not paid their levies (has fallen into arrears)
may not vote at general meetings (except for special or unanimous
resolutions).
If the owner fails to pay levies, the trustees (representing the body
13
corporate) could instruct an attorney to write a letter of demand for
the unpaid levies. If the owner still refuses to pay levies, the trustees
can sue to recover the unpaid amounts in either the Magistrates’
Court (usually when the arrears are less than R300 000) or the High
Court (usually when the arrears are more that R300 000). This could
mean that the trustees would instruct a lawyer to attach and sell the
owner’s unit to recover the levies still owed.
The body corporate cannot evict tenants (i.e. people who are renting)
from a unit because of non-payment of levies or if they break the
conduct rules. This is because there is no legal relationship between
the tenants and the body corporate. There is, however, a relationship
between the owner and the body corporate. An owner is directly
responsible for making sure that the tenants that are renting from
them follow the conduct rules, and the body corporate can hold
owners responsible if they do not do so.
If an owner is not obeying the rules (and if the conduct rules allow
for it) they can be fined. In extreme cases you can also approach
14
a lawyer and ask them to write a letter telling the owner to obey
the rules. If the owner still disregards the rules, the trustees can
implement arbitration.
If tenants are disobeying the conduct rules, the trustees should get
in touch with the owner of the unit and get the owner to deal with
the situation. An owner can include a requirement to adhere to the
conduct rules in a tenant’s lease agreement. This would mean that
a tenant would have to follow the conduct rules or risk breaching
(breaking) their lease.
Negotiation
Negotiation is a form of alternative dispute resolution (ADR)
that takes place directly between the parties involved in the
disagreement. When negotiating the parties sit down with each other and try
Mediation
Mediation is a form of ADR in which a neutral third party
helps the parties to reach agreement or negotiate a settlement out
of court. A mediator facilitates this process, which is normally voluntary. A
mediator may charge a fee to mediate a dispute, but that can be negotiated
with them. Mediation is usually not legally binding, but it is a good idea for
the parties to put the mediated agreement in writing and sign it.
16
Arbitration
Anyone can ask for the disagreement to be arbitrated instead of
having to go to court. Arbitration is a form of ADR where parties
to a dispute refer it to one or more persons to review the evidence and impose
You also have to inform the trustees and managing agent that you have
informed the other person.
You must then wait 14 days for a reply. If no reply is received, any of
the parties can demand that arbitration go ahead.
You must then wait another 3 days for a reply. If there is a reply (or
Fro
to appoint an arbitrator. See the Resources section at the end of this guide
Ombud Service Act comes into effect, sectional title owners will not be able to
17
2.7 What can owners or tenants do if they think the trustees
are not doing their jobs properly?
The owners can request the trustees call a special general meeting
to vote off the old trustees and vote in new trustees. In addition to
this, trustees can be “fired” if they are found guilty of fraud, become
insolvent (or bankrupt), are grossly negligent or are of unsound
mind (which has to be judged by a court).
If the trustees do not want to arrange the meeting, then the owners
will have to get 25% of all of the registered owners to request the
meeting, which constitutes a quorum and allows people to vote for
new trustees.
The trustees appoint the managing agent and also have the power to
terminate the managing agent. Should an owner wish to terminate
the current managing agent, they must approach the trustees and
explain why they think the managing agent should be fired. An agent
may be dismissed if they breach the contract in some way, or if the
agent is declared bankrupt, found guilty of fraud or is found to be
grossly negligent.
If the trustees fail to respond, the owner can apply to the High Court
for an order to appoint an administrator.
19
!! of administrators
!!
corporate (the legal entity) and not necessarily to the individual
owners, this may lead to some unpopular decisions being made
in order to get the sectional title scheme back on track. For
example, a special levy might be raised, which some owners
might not be able to afford. If this is the case it is important
to speak to the administrator about the issues that may arise.
t
t
Yes and no. Administrators are specialised in making sure that the
sectional title scheme functions well, is financially secure and well-
maintained. They will do everything they can to make sure that it
is well managed and debt-free. People should therefore try to co-
operate with administrators, so that they may achieve this objective.
If the owner cannot be contacted for some time, legal action should
be undertaken by the trustees (on behalf of the body corporate) to
recover any outstanding levies. The trustees could apply to court to
have the property attached and sold at auction. This means that the
owner would lose his property and it would be sold to a new owner.I
21
2.17 What can be done if people live in a unit unlawfully?
If there are unlawful occupiers (these are people who do not have
the consent of the owner to stay in the unit or who have remained
in the unit after their lease has been cancelled or terminated) living
in a unit, then eviction proceedings can be instituted by the owner
of the unit. An owner cannot evict a person without a court order. A
court would only grant an eviction order if it is sure that the eviction
would be “just and equitable” in the circumstances.
When bodies corporate are created, they should usually start off on a
clean slate and would not have any debt.
If the body corporate begins to get into debt and struggles to pay
its debts or expenses, the trustees should notify the owners of the
situation and may raise a special levy to make sure that the body
corporate can pay its debts.
If this does not rectify the situation, the trustees can apply to the
High Court to appoint an administrator to help the body corporate
get back on its feet.
22
Once the Sectional Titles Schemes Management Act comes into
effect, section 15(1)(c) of the Act will provide some protection to
owners who can prove that they have paid their levies. The Act
provides that if an owner has paid their levies, they cannot be held
liable with the other owners.
23
24
Useful organisations
and online resources
Organisations
You can read more about the National Association of Managing Agents
(NAMA) on their website: http://www.namasa.co.za. Also available is a list
of all registered NAMA members in Gauteng and throughout the country.
PO Box 6121
Cresta
Johannesburg 2118
25
Online resources
http://www.paddocks.co.za/images/PDFs/sectional_titles_act_and_
prescribed_rules.pdf
Sectional Titles Schemes Management Act 8 of 2011 (this Act has been
signed by the President but has not come into effect yet)
http://www.info.gov.za/view DownloadFileAction?id=147401
Community Schemes Ombud Service Act 9 of 2011 (this Act has been
signed by the President but has not come into effect yet)
http://www.info.gov.za/view/DownloadFileAction?id=147402
http://csg.dla.gov.za/reg9586.htm
http://www.paddocks.co.za/images/PDFs/st_amendments_to_regulations_
oct_2011.pdf
http://www.info.gov.za/view/DownloadFileAction?id=186167
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this guide was
produced by